This trading day began with news that should have caused sharp changes in the market. However, the situation turned out to be the opposite.
Thus, the UK inflation growth slackened to 8.7% from 10.1%. Meanwhile, analysts had expected a more considerable slowdown to 8.5%.
A slower than anticipated decline in inflation supported the pound sterling. The currency started rising immediately, though quite slowly.
The fact is that the Bank of England is likely to go on raising the key rate under the existing conditions. At the same time, the Federal Reserve intends to take a pause and then, loosen its monetary policy.
The pound sterling also pushed the euro up via the US dollar index. Since the greenback remains extremely overbought, both the euro and the British pound may gain in value for the whole day. The market situation will alter only in case of unexpected news.

On the trading chart, we see that the volume of short positions on the euro dropped near the local low of the previous week located at 1.0770. This led to a rebound, which may slacken the euro’s downward cycle.
The current rebound may allow the euro/dollar pair to climb above 1.0800. However, this will hardly cause any considerable changes. Traders will get a technical signal of a jump in long positions if the price consolidates above 1.0850. Until then, the pair is likely to hover between the levels of 1.0750 and 1.0850.

Meanwhile, the pound sterling also approached the support level of 1.2350, where the volume of short positions slumped. As a result, the pound/dollar pair rebounded.
Once the pair consolidates above 1.2500, traders will get a technical signal of the end of the correctional movement. In the event of this, the volume of long positions may increase, thus allowing the pair to grow above 1.2550. However, the correctional movement is still in force at the moment. It may continue, thus pushing the price to the support level of 1.2350.


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00:00 INTRO
00:11 UK INFLATION
00:36 Bank of England key rate
00:51 QUOTES
01:11 EUR/USD
01:59 GBP/USD